Category Archives: Shemitah

The sabbath year (shmita Hebrew: שמיטה‎, literally “release”) also called the sabbatical year or sheviit (Hebrew: שביעית‎, literally “seventh”) is the seventh year of the seven-year agricultural cycle mandated by the Torah for the Land of Israel,[1] and still observed in contemporary Judaism.

During shmita, the land is left to lie fallow and all agricultural activity, including plowing, planting, pruning and harvesting, is forbidden by halakha (Jewish law). Other cultivation techniques (such as watering, fertilizing, weeding, spraying, trimming and mowing) may be performed as a preventative measure only, not to improve the growth of trees or other plants. Additionally, any fruits which grow of their own accord are deemed hefker (ownerless) and may be picked by anyone. A variety of laws also apply to the sale, consumption and disposal of shmita produce. All debts, except those of foreigners, were to be remitted.[2]

Chapter 25 of the Book of Leviticus promises bountiful harvests to those who observe the shmita, and describes its observance as a test of religious faith. There is little notice of the observance of this year in Biblical history and it appears to have been much neglected.

Like this:

Puerto Rico avoided a default on debt maturing on Tuesday but warned that its deteriorating liquidity meant that future defaults loom.

There had been speculation that the U.S. territory would default on all or part of the $355 million notes issued by its financing arm, the Government Development Bank.

While Puerto Rico first defaulted in August, failure to make the payment on Tuesday would have been more significant because part of that debt was protected by the commonwealth’s constitution.

Another default could have triggered lawsuits, further spooked investors and undermined the island’s efforts to climb out of $72 billion in debt.

Puerto Rico said in a statement that it made the payment despite “extreme fiscal challenges.” It warned of problems ahead as it will have to “claw back revenues pledged to certain bonds issued in order to maintain public services,” Governor Alejandro Garcia Padilla told the U.S. Senate Judiciary Committee.

The commonwealth would use the clawbacks to fund payments on top-priority debt carrying constitutional protections, Garcia Padilla said in written testimony. However, in oral testimony, he said clawbacks could also be used to maintain public services.

“The imminence of a default when presented with the alternative between paying creditors and providing essential government services looms large,” Garcia Padilla said.

Garcia Padilla signed an order allowing Puerto Rico to begin redirecting certain funds in light of recently revised revenue estimates and its deteriorating liquidity situation, the island said.

In written testimony, Garcia Padilla said: “In simple terms, we have begun to default on our debt in an effort to attempt to repay bonds issued with the full faith and credit of the commonwealth and secure sufficient resources to protect the life, health, safety and welfare of the people of Puerto Rico.”

Height Securities analyst Daniel Hanson said the comments meant Puerto Rico was defaulting on “instrumentality debt, not debt with a constitutional pledge.” General obligation bonds, along with GDB bonds that have constitutional guarantees, should be safe, he said, but bonds from entities such as highway authority PRHTA and infrastructure financing authority PRIFA are at risk.

Of the $355 million paid on Tuesday, $81.4 million was to service non-general obligation-backed debt and $273.3 million was for notes backed by the commonwealth’s general obligation guarantee.

During the hearing Senator Richard Blumenthal, a Democrat, said Puerto Rico “narrowly averted a complete default” by unsustainable financial gymnastics.

The payment on bonds issued by the GDB was crucial as Puerto Rico tries to stretch its liquidity into 2016 to provide more time to restructure debt.

In August, Puerto Rico paid only $628,000 of a $58 million payment due on its Public Finance Corp bonds.